Day: March 22, 2013

The meat ax is easier to wield than a scalpel

Posted in Uncategorized - March 22, 2013 - 0 Comment
I wrote this piece a few weeks ago for the March-April issue of Stability Operations, which has been put up on the web in the last few days.  I think it is still largely valid–I was trying to say things with at least a few weeks of shelf life.  I relied on the Bipartisan Policy Center for the overall numbers, which otherwise I found surprisingly variable from source to source.  The big question now is whether the growing impacts will convince Congress to take action:
I am not a budget expert, but all of us need to figure out what “sequester”means in terms of real impact on programs and policies. There is still a good deal of uncertainty, as the agencies involved have not completed their plans for how to cut because Congress might still change things. Here’s what  I have been able to fathom for defense and foreign affairs spending.  All of it is subject to last-minute adjustments or postponement as we head toward the trigger date of March 1, when defense has to cut 13 percent from non-exempt discretionary spending and foreign affairs  agencies 8.2 percent from non-exempt discrtionary spending.

In FY 2013, sequestration would mean a cut of something like $45 billion for the Department of Defense. Overseas Contingency Operations are not subject to sequestration, so forces in conflict zones would be fully funded, but their support at home could be severely hampered.  The drawdown from Afghanistan will presumably continue apace, but training and equipping of replacements is uncertain.
For the State Department and United States Agency for International Development (USAID), the total cut amounts to $2.6 billion, $1.7 billion from foreign assistance and $850 million from
State Department operations. State and USAID are likely not to want to cut personnel, especially if the cuts are not going to last for along time.  Secretary of State John Kerry, according to Josh Rogin’s Feb. 15 article on The Cable, offered this shopping list of affected programs:
  • $200 million cut from humanitarian assistance, which would impact millions of disaster-stricken people;
  • $400 million cut from global health funding, hurting efforts to stop HIV/AIDs and child death;
  • $500 million cut from global security accounts;
  • $300 million cut from foreign military financing accounts, which could result in cuts to assistance to Israel, Egypt and Jordan; and
  • $70 million cut from USAID operations accounts.
The currently envisaged cuts also include $168 million from embassy, consulate and other
security requirements. With humanitarian requirements in Syria skyrocketing and the Arab spring generating new assistance needs, this is bad news. According to the article, these specific program cuts are in addition to“unspecified cuts to international peacekeeping operations, counter narcotics programs, counterterrorism efforts and non-proliferation activities.” [2]
The overall picture is dramatic but not just because of the absolute magnitude of the cuts.Provided there were sufficient time to make necessary adjustments and flexibility to distribute the cuts so that priority programs were protected, a good manager could figure out how to meet the percentages by cutting lower priorities and preserving higher priorities. But that is not allowed under the sequestration rules. The cuts would need to be made with just over half the
fiscal year remaining and without any certainty about what the final numbers for FY13 will be or any idea what will happen in FY14, which begins Oct. 1. There is no flexibility: all budget lines get cut, apart from those Congress exempted. The administration would have little or no flexibility to move funding from lower priorities to higher priorities, except within budget lines.
What does this mean for the foreign affairs community? It is unlikely that anyone at the State Department or USAID will be willing to initiate major capital or program adjustments in response to sequestration, since it is unclear how long it will last. Embassy Baghdad will not move to smaller and cheaper quarters, ongoing foreign assistance programs will get first dibs on funding while new starts go begging and modernization already started will be completed rather than suffer penalties from contract cancellation.  A defense and foreign affairs establishment greatly beefed up during a decade of war and facing new challenges is going on short rations. If I know my bureaucrats, they will try to preserve what they can, rather than making radical adjustments to a more austere future.
Sequestration is likely to resemble in some ways the federal government shutdown of 1995/96, albeit milder in the disruptions caused and slower to take effect. There could be furloughs and suspension of non-essential services, as well as a good deal of confusion and uncertainty. Politicians are fond of claiming that government does not create jobs, but sequestration could add 1 to 2 million to the unemployed. Economic growth will take a significant hit— perhaps as much as
-.5 percent, which is big in an economy that didn’t manage much more than 2 percent growth in 2012.
The hit will be felt most in the Washington, D.C., area and in states that are heavily dependent on Pentagon and other discretionary spending.
This is definitely not what the frugal superpower needs. Short-term percentage across-the-board cuts favor fat programs and limit structural adjustments. It would be far better to provide budget targets for the next 10 years and allow the agencies to meet them however they think best, subject to Congressional approval. The Department of Defense and foreign affairs agencies could certainly save percentages close to those required under sequestration, but only if given time and flexibility.
It seems unlikely at this point that Democrats and Republicans can reach agreement on a reasonable long-term trajectory of budget ceilings. The meat ax is far easier to wield than a scalpel, but its effects are far less likely to help the patient survive.
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